Written by · Reviewed by Smiths Insurance & KiwiSaver — licensed Financial Advice Provider (FSP712931) · Last updated 2026-10-20

Does Life Insurance Cover Funeral Costs in New Zealand?

Some New Zealand life insurance policies include an early payment for funeral costs, but it varies by insurer and not every policy has one. Where it exists it is an advance of your own sum insured, up to $25,000 on the wordings we read. Separate funeral insurance, such as Momentum's for ages 40 to 75, pays a fixed benefit of $3,000 to $30,000 towards costs.

In short

Looking for standalone funeral insurance rather than a life policy? Compare the providers in our funeral insurance comparison, or see what funeral insurance is.

A funeral advance is a feature in some life insurance policies that releases part of the death benefit early, so the family can pay for a funeral before the full claim is assessed. On the AIA and Fidelity wordings it is treated as an early payment of the life cover benefit and the sum insured is reduced by the amount paid. Whether your policy has one, how much it pays, and what triggers it depends entirely on the insurer and the wording. That is why the safest answer to "does life insurance cover funeral costs?" is: it might release some of the money early, check your policy. This page compares what insurers' own documents say and sets out when a life policy is enough on its own and when a separate funeral policy such as Momentum's fills a gap. If you are shopping for a standalone product, our funeral insurance comparison covers the market.

A person beside a funnel feeding down into two separate jars

How a funeral advance works

  1. Death occurs. The policyholder, family or executor notifies the insurer.
  2. The advance is requested or released. On AIA's wording it is paid on written notification acceptable to AIA that the life assured has died, and payment "does not indicate Our acceptance of the claim". On Fidelity's wording you apply for it. On Asteron's it is paid when the claim is accepted.
  3. The funeral is paid. The family uses it for the funeral director's account and other early costs.
  4. The full claim follows. The rest of the sum insured is paid when the claim is settled.

Money held by the deceased can also help in the meantime. govt.nz says banks can release funds from the deceased's account to pay funeral costs without waiting for probate, and without the person being the executor (govt.nz: What to do when someone dies). So an advance is useful, but it is not the only way a family might meet the first bill.

What each insurer's documents say

The table quotes only wordings and product pages we read on 20 October 2026. Where we could not verify a figure it is left out.

Insurer Name in the document What it says it pays Trigger
AIA, legacy Personal Cover wording PC-LC-10/2023 Funeral Benefit The lower of the Life Cover Benefit, $15,000 if the life assured is the sole policy owner, or $25,000 if there is a surviving policy owner "Immediately" on written notification acceptable to AIA of death
AIA, current Living Life Cover page Bereavement support An early payment "up to $25,000" Conditions apply
Fidelity Life, Platinum Plus wording (version LCW-24B) Bereavement benefit An immediate advance of $25,000, or the sum insured if less You apply after the insured person dies
Asteron Life, life brochure Funeral advancement benefit An advance of $15,000 or $25,000 from Life Cover When the life insurance claim is accepted
Chubb Life, Assurance Extra Bereavement Support Benefit An early payment of up to $25,000 Early payment of Life Cover
Southern Cross Life (underwritten by Chubb Life) Bereavement Support Benefit Up to $25,000 of Life Cover paid early Per the insurer's terms
Kiwibank life cover (nib nz limited) Funeral Expenses A lump sum of $15,000 on death or terminal illness (12 months) at no extra cost Per the insurer's terms
ANZ life cover Advance payment "An advance payment to help with immediate expenses like a funeral"; no amount found Per the insurer's terms

Sources: AIA wording PC-LC-10/2023, AIA Life Cover, Fidelity Life wording, Asteron Life brochure, Chubb Life, Southern Cross Life, Kiwibank, ANZ. The AIA, Fidelity, Asteron and Chubb benefits are early releases of your own sum insured, not extra money; the Kiwibank and ANZ pages do not say how their amounts interact with the sum insured. Asteron's brochure also lists a funeral conversion benefit that lets you convert up to $30,000 of Life Cover to a level-premium funeral benefit if you have held Life Cover for more than 10 years and are 65 or older.

What was not verified

We did not verify a funeral advance for Partners Life or nib's own policies. That is not evidence none exists; it means we have not read the wording. Ask your adviser or the insurer.

How to find it in your own policy

Kneeling on the floor, a woman flips through a thick booklet covered in squiggly scribble lines

Searching for "funeral" is the most common way people conclude they have no such benefit. Search also for bereavement, advance, advancement, early payment and accelerated, and look in the built-in benefits section. Then check three things.

When is the advance enough?

FDANZ's 2026 Industry Trends Report (April 2026) gives an average of $11,700 (range $10,000 to $13,900) for a full cremation funeral with 50 attendees, catering and a celebrant, and $14,300 (range $12,800 to $17,000) with burial; an unattended cremation averages $4,700 (FDANZ). Your costs depend on your choices, so use these as a guide, not a quote. See what a funeral costs.

Your situation Is a life policy's advance likely to be enough? What else to consider
You hold life cover with an advance of $15,000 to $25,000 It is in the range of FDANZ's averages, but check your own wording and trigger The advance reduces the sum your family receives later
You hold life cover but cannot find an advance in the wording Do not assume one Ask the insurer; consider savings or a separate product
You hold no life cover, or it has lapsed No Funeral Insurance, a prepaid plan or saving; see funeral insurance vs saving
You are past the entry age for life cover Not available See funeral insurance age limits and life insurance over 75
Your life cover is committed to a mortgage and income The advance comes out of that sum A separate funeral product keeps the two apart; see mortgage life insurance

The Work and Income Funeral Grant has a maximum of $2,697.43 (page updated 24 June 2026), is reduced by the deceased's assets when they were not your partner or child, has an income test where the deceased was your partner or child, and prepaid funeral cover can stop you getting it (Work and Income). See funeral insurance vs the WINZ grant.

Momentum Funeral Insurance and Quick Life: which pays funeral costs?

Funeral Insurance is Momentum Life's product for this job. It is guaranteed acceptance for ages 40 to 75: no medical, health questions or paperwork. The benefit is $3,000 to $30,000, with a cap of $30,000 per life insured across all Momentum funeral policies, and it pays a fixed benefit towards costs, not the funeral itself. The first 24 months pay only for accidental death (death within 90 days of the accident, at 3 times the benefit). Any other death in that window pays no benefit and all premiums for that person are refunded; after 24 months, death from any cause is covered. Premiums are fixed each year until the 89th birthday and then stop, and the wording says total premiums could exceed the benefit and the benefit may not cover the cost of the funeral. There is a 30-day free look from the acceptance date. The beneficiary must be a person, so Momentum cannot pay a funeral director directly (Funeral Insurance policy wording, 17 August 2023).

Quick Life is life cover, not funeral insurance. It accepts ages 18 to 65 for $50,000 to $300,000 per life, and the wording we read has no early funeral payment: the benefit is paid after the claim is approved, usually within 48 hours of approval. The first 2 years exclude death from pre-existing conditions, and premiums are refunded if no claim is payable. At 75, $20,000 of the benefit becomes free and the policyholder can elect a free $20,000 funeral benefit or continue Quick Life with the free component (Quick Life policy wording, November 2025).

Momentum Life Limited's A.M. Best rating is B (Fair), which Momentum's own table places in its "Vulnerable" range; its solvency ratio was 107% at 30 June 2026 (Momentum: Financial strength). QuoteHub is a Momentum Life partner, and Smiths Insurance & KiwiSaver may receive a commission if you buy through our link; see how we are paid. The plan pages are Funeral Cover and Quick Life, and the funeral insurance hub compares other providers. The buttons on this page open Momentum's online quote.

What the advance does not do

Frequently asked questions

Does life insurance automatically include funeral cover?

No, not automatically. Several NZ life policies include an early funeral payment, and the amount, name and trigger differ. Check your own wording and search for bereavement, advance and early payment as well as funeral.

How quickly does the funeral advance get paid?

It depends on the trigger. AIA's legacy wording pays on written notification of death, Fidelity's on application, Asteron's when the claim is accepted. None of those wordings promises a fixed time; the real constraint is how fast the family gets the documents to the insurer.

Does the advance still pay if the claim is declined?

It depends on the wording. AIA's legacy wording says payment of the Funeral Benefit does not indicate acceptance of the claim. Asteron pays when the claim is accepted, so a declined claim means no advance. Either way it is part of your sum insured.

Can I hold both life insurance and funeral insurance?

Yes. Some people keep a funeral policy so funeral costs do not reduce the sum life cover pays. Momentum caps its own funeral benefits at $30,000 per life across all its funeral policies.

Is there a maximum age for life insurance with a funeral advance?

Insurers set their own entry ages. AIA Living Life Cover is 10 to 70 and Fidelity Life's is 16 to 75 with no expiry age (AIA; Fidelity Life). Momentum's Funeral Insurance is 40 to 75. Past those ages, see our seniors funeral insurance guide.

Do I need an adviser to arrange it?

Not always, and some insurers sell direct. A licensed adviser can compare insurers and check the advance in your wording. The FMA says most insurance advisers receive commission from the insurer, built into the premium (FMA: Insurance advice). Check your options.

Financial advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). QuoteHub is a trading name. This article is general information and not personalised financial advice. Benefit figures come from the documents named, on the dates shown, and apply to the specific products named; your policy may differ. This article publishes no premium figures.

References

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